The possibility of a new global energy shock moved closer this week as ISIS forces made major territorial gains in Iraq, the speed of events taking world leaders by surprise.

Already there are tangible tremors in oil markets. Iraq’s main oilfields are to the south and north of ISIS positions and so remain little affected so far, but the situation remains extremely precarious – oil prices rose to $115/barrel before easing back.

So perhaps BP spoke too soon. At the launch of the company’s latest Statistical Review, which took place just before the ISIS advance, the company’s chief economist spoke of an ‘eerie quiet’ in global oil markets. BP said this was the result of the growth in US shale production neatly offsetting large production losses elsewhere during 2013.

But it’s hard to see how that balance will be maintained if events in Iraq continue to deteriorate. The International Energy Agency (IEA) forecast relies on Iraq to provide 60% of OPEC production growth this decade. The chances of Iraq ‘coming through’ seem even lower than ever now foreign oil workers are pulling out, and it is by no means the only potential threat to global energy – last week Russia cut off gas supplies to Ukraine over unpaid debts.

In the meat of the BP report, there was good news and bad news – as shown in our graphs of the week. The good news is that renewable energy capacity grew strongly in 2013, the bad is that it remains tiny compared to fossil fuels, the worst is that dirty coal was the fastest growing energy source of all. BP chief executive Bob Dudley spoke blithely of how the “energy system [is] adapting to a changing world”, but made no mention of how the world is adapting to the energy system – by warming. Last month was declared the hottest May on record.

The potential economic impact of climate change did make headlines nevertheless. In the UK, Lord Stern warned that current economic models fail to take into account the latest science on climate change, while a US bipartisan report - including voices like Michael Bloomberg and Henry Paulson - urged action to avoid the serious economic risks associated with climate change. Meanwhile the World Energy Council reported that the energy system itself is threatened by climate change as power plants become vulnerable to droughts.

Fortunately, the action needed to cut emissions and head-off the energy supply crisis is broadly similar - a rapid transition away from fossil fuels along with urgent action on energy conservation and efficiency. Solar records in Germany and the UK this week are a step in the right direction, but the pace of change needs to accelerate rapidly.

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